IZEA - NASDAQ

Good day, and welcome to the I

Good afternoon, and welcome to I

Thank you, Matt, and good afternoon, everyone. This afternoon, we released our results for the second quarter and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission. Today, it's my pleasure to review our operating results for the quarter ended June 30, 2025, compared to the second quarter of 2024, including some year-to-date comparisons to discuss certain balance sheet highlights and to update you on our stock buyback initiatives. Revenue during the 3 months ended June 30, 2025, nearly all of which was Managed Services, totaled approximately $9.1 million, increasing 0.4% over the prior year quarter. The prior year quarter included $0.8 million in revenue from Hoozu, which we divested in December 2024. Excluding Hoozu, Managed Services revenue increased 12.9% in the current quarter compared to the same period last year. Managed Services bookings is a key metric that reflects current period demand for our Managed Services. On average, booked amounts convert to recognized revenue over approximately 6 to 7.5 months. However, in some cases, the timing of revenue conversion may extend up to 12 months depending on certain factors such as customer marketing fund allocation and campaign execution. During the second quarter of 2025, Managed Services bookings totaled $5.6 million, bringing the total bookings for the first half of 2025 to $13.1 million. This compares to $9.6 million in the second quarter of 2024 and $18.3 million for the first half of 2024, excluding Hoozu in all periods. The decline in the first half 2025 bookings was attributable to three primary factors. Roughly 1/3 of the year-over-year decline reflects a timing difference as one of our largest customers front-loaded a portion of their 2024 spend in March of that year, whereas a comparable commitment was made in the fourth quarter of 2024. We also undertook a strategic shift towards larger, more profitable and recurring accounts, intentionally reducing our emphasis on smaller, less profitable projects. As a result, fewer internal resources were allocated to these lower-value engagements. Finally, a number of customers have paused on a meaningful portion of their marketing budgets in response to macroeconomic pressures, including some tariff-related uncertainties affecting certain industries. As of June 30, 2025, our Managed Services backlog, representing unrecognized revenue from ongoing contracts and recent bookings not yet invoiced totaled $11.5 million. Our total cost of revenue, including both external creative and internal labor costs totaled $4.4 million or 48% of revenue in the second quarter of 2025 compared to $5.2 million or 57% of revenue in the same quarter of the prior year. Removing Hoozu, our cost of revenue increased by approximately 1% in the second quarter of 2025 compared to the prior period. Expenses other than the cost of revenue totaled $4 million in the second quarter of 2025, down from $6.8 million or 41.4% compared with the prior year quarter. Sales and marketing costs totaled $1 million during the second quarter, a 70% decrease from $3.2 million in the prior year period. This decrease reflects cost savings from our targeted workforce reduction and a temporary pause in certain marketing initiatives. General and administrative costs were $2.9 million in the second quarter, down 14.1% from the same period last year. The decrease was primarily driven by lower employee-related costs, reduced reliance on external contractors and decreased spending on professional services, software licenses and data storage fees. We were profitable in the second quarter, generating $1.2 million in net income or $0.07 per share on 17.8 million shares compared to a net loss of $2.2 million or negative $0.13 per share on 16.4 million shares for the second quarter of 2024. Our results are particularly significant and that this is the first quarter in I

Thank you, Peter, and good afternoon, everyone. Less than a year ago, the leadership team and I made a commitment to accelerate our path to profitability. Today, I'm proud to announce that we have delivered on that commitment. For the first time in the history of this company, we are profitable. In our effort to fortify, simplify and focus, we successfully reduced the cost structure back in Q4 2024 without sacrificing growth in the first half of 2025. This demonstrates that we have designed and activated a better business model, a model that puts America first and limits our international exposure, a model built for higher growth and more profitable market segments, a model that serves our top customers even better powered by our proprietary technology, a model that's attracting capable talent and M&A opportunities, a model that we believe to be sustainable. In addition to the financial accomplishments, there are a number of operational activities in Q2 worth highlighting. We won new business from Jeep, Nestlé, Kellogg's and more. Our sales pipeline is full of leads with larger opportunities and higher-quality clients. We produced exciting new work for Jeep, F1: The Movie, Superman and Owens Corning to name a few. We kicked off a new tech initiative that will enhance our campaign management product and inject even more AI into our business processes. Finally, we hired our first VP Talent acquisition, Cecilia Peralta, to attract more leaders and elevate our brand among talent in the industry. In summary, Q2 was another exceptional quarter in which we achieved our financial commitments. We continue to grow revenue by double digits, achieved profitability and generated cash from operations. This is strong evidence that our new model works and positions us to continue to deliver results. We see and are pursuing a number of additional value creation opportunities ahead of us. For this reason, we are optimistic about the future of this company and our ability to deliver additional value to all of our stakeholders, shareholders, clients and employees alike. Thank you for your time today. I will now open the call for Q&A from the analyst community.

[Operator Instructions] And your first question today will come from Jon Hickman with Ladenburg Thalmann.

Nice quarter. Can you hear me okay?

Yes, we can.

So I have three questions. First of all, you mentioned M&A activity. Could you like elaborate -- are you actively talking to people?

We are. We're actively talking to people. And as I've said in the past, this is definitely part of our ambition, but we're being strategic about it. We're being choiceful about what our strategy is. And we're also making sure that we have integration readiness as well. So the first half of the year, as you know, we put a number of processes and so forth in place just trying to make sure that we have a platform that is ready to integrate. So we're basically both ready from a financial capital perspective and from an operational perspective, and we're actively out there talking with folks.

Okay. What about valuations in the -- I mean, Ted used to talk about that they were -- the private markets valuations were very expensive compared to your valuation.

Well, we're going to be reasonable. We're not going to overpay, and we'll -- we want to be fair on both ends of it. But we're certainly not going to chase deals and try to overpay. I mean, we're going to be very responsible about how we use our capital. And I think we're in a position to work out deals that can be accretive and be a win-win for all parties.

Okay. So my next question has to do with your bookings for Q1 or Q2. So how are we -- can you elaborate or talk about kind of the down sequential bookings versus growth going forward in revenues?

Yes. As Peter said, there's really three issues that were driving the decline. One was simply a timing issue on a significant client. And that booking, if you equalize it for timing, is actually up. So -- and then if you strip that out and look at the other two issues, the second issue does have to do with our intentional shift away from these unprofitable accounts. So some of this was -- it's just very much a matter of the change in model as we move from a model that was more transactional to a model that's more enterprise and relationship-oriented with a lot more upside and certainly profitable going to the higher end of the market. The quantity over quality is changing. And so we believe in the long-term success of this model and the impact it's going to have on revenue. And then the third is the economic -- macroeconomic environment right now. As we all know, just with tariffs and government, things like that, we did see some pausing and some uncertainty of some of our clients. But on the other hand, we have a number of industries, different verticals that we are in that are up not just double digits, but even triple digits. So it's a portfolio.

Okay. And then lastly, maybe this is for Peter. But operating expenses going forward, are they -- should the Q2 numbers kind of -- do you expect much growth in the next couple of quarters?

Well, I think...

Or should they be about flat?

Yes. What I think is we've said that we cut costs that we don't expect to repeat until they need to fuel growth. The exception there might be marketing costs, which previously, we spent marketing costs to drive demand. Going forward, we'll continue to do that at a low rate, but we're pausing on that for now. My guess is that quarter 2 costs look about like they're going to look -- and we also -- we have some efficiencies and there's some headroom for us to grow without growing costs. So we're going to be judicious about that and keep our eye on the bottom line.

Yes. I would just add to that, that I really want to underscore on that the change in our business model, we permanently lowered our cost structure, and we're proving out that we can be profitable. And we intend to scale this efficiently. So as revenues grow, obviously, expenses will grow, but we're being disciplined in making sure that there's a relationship to it and that it grows in parallel.

Is there any way I can get any revenue guidance from you for the remainder of the year? Just thought I'd ask.

You don't get if you don't ask. We're not going to give guidance. I think the public statement that we made both in the earnings release and the liquidity section of the 10-Q, of the MD&A is that we have a good pipeline, relationships are strengthening and we're adding large customers. We think that's going to support our growth going forward. And -- but that it could be uneven. So with that in mind, that further emphasizes our eye on our cost to make sure that they stay with a healthy relationship.

Okay. Just one more question. The VP of Talent Acquisition, that person works fully for you? I mean, she's full time for I

Yes. We're investing in her...

Is she mostly after marketing talent?

No, all sorts of talent. Yes, as we've been -- yes, we believe that this is not just a technology-driven industry, but a talent-driven industry as well. And so this is more about positioning ourselves for future growth to make sure that we're out in the market, establishing relationships with talent so that as we grow, we're able to do that seamlessly. And we'll be making announcements in the future about new talents that are joining us.

This will conclude our question-and-answer session. I would like to turn the conference back over to Matt Gray for any closing remarks.

Thanks so much, Nick, and thank you, everyone, for joining us this afternoon. As a reminder, I